IDEAS home Printed from https://ideas.repec.org/a/pal/jorapm/v19y2020i3d10.1057_s41272-019-00222-5.html
   My bibliography  Save this article

Does price gouging happen in the lodging industry? Case of Hurricane Florence

Author

Listed:
  • Seung Hyun Lee

    (East Carolina University)

  • Jaeyong Lee

    (Premier Resorts & Management, Inc.)

Abstract

This study examined price gouging in the lodging industry using the case of Hurricane Florence made landfall in North Carolina. Performance percentage differences were used to determine whether hotels charge exceptionally high room rates in the wake of an emergency. The study supported the notion of price gouging in the lodging industry in the name of the application of revenue management even though price gauging is illegal and prohibited. Extreme increases in room rates were apparent in Wilmington where the Hurricane Florence made landfall and nearby areas in a response to a higher demand, thus resulting a higher revenue. In addition, the closer to Wilmington the hurricane made landfall, higher price increases were detected. The moderating effect of the month on the relationship between distance from landfall and ADR changes was also observed. However, the term of price gouging is often associated with exploitation, so hoteliers should be mindful whether unpredicted additional revenue generated after the hurricane is enough to offset criticism price gouging receive, especially in its legal terms and ethical considerations.

Suggested Citation

  • Seung Hyun Lee & Jaeyong Lee, 2020. "Does price gouging happen in the lodging industry? Case of Hurricane Florence," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(3), pages 151-161, June.
    • Handle: RePEc:pal:jorapm:v:19:y:2020:i:3:d:10.1057_s41272-019-00222-5
    DOI: 10.1057/s41272-019-00222-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41272-019-00222-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41272-019-00222-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Deacon, Robert T & Sonstelie, Jon, 1985. "Rationing by Waiting and the Value of Time: Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 627-647, August.
    2. Michael A. Hitt & Beverly B. Tyler, 1991. "Strategic decision models: Integrating different perspectives," Strategic Management Journal, Wiley Blackwell, vol. 12(5), pages 327-351, July.
    3. Tim Taylor & Ramon Arigoni Ortiz, 2009. "Impacts of Climate Change on Domestic Tourism in the UK: A Panel Data Estimation," Tourism Economics, , vol. 15(4), pages 803-812, December.
    4. Zwolinski, Matt, 2008. "The Ethics of Price Gouging," Business Ethics Quarterly, Cambridge University Press, vol. 18(3), pages 347-378, July.
    5. L. J. Bourgeois, III & Kathleen M. Eisenhardt, 1988. "Strategic Decision Processes in High Velocity Environments: Four Cases in the Microcomputer Industry," Management Science, INFORMS, vol. 34(7), pages 816-835, July.
    6. Charley Granvorka & Eric Strobl, 2013. "The Impact of Hurricane Strikes on Tourist Arrivals in the Caribbean," Tourism Economics, , vol. 19(6), pages 1401-1409, December.
    7. Jodie Ferguson & Pam Ellen & Gabriela Piscopo, 2011. "Suspicion and Perceptions of Price Fairness in Times of Crisis," Journal of Business Ethics, Springer, vol. 98(2), pages 331-349, January.
    8. D. Jeffrey & R.R.D. Barden & P.J. Buckley & N.J. Hubbard, 2002. "What Makes for a Successful Hotel? Insights on Hotel Management Following 15 Years of Hotel Occupancy Analysis in England," The Service Industries Journal, Taylor & Francis Journals, vol. 22(2), pages 73-88.
    9. W. David Montgomery & Robert A. Baron & Mary K. Weisskopf, 2007. "Potential Effects Of Proposed Price Gouging Legislation On The Cost And Severity Of Gasoline Supply Interruptions," Journal of Competition Law and Economics, Oxford University Press, vol. 3(3), pages 357-397.
    10. Tzu-Ming Liu, 2014. "Analysis of the Economic Impact of Meteorological Disasters on Tourism: The Case of Typhoon Morakot's Impact on the Maolin National Scenic Area in Taiwan," Tourism Economics, , vol. 20(1), pages 143-156, February.
    11. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    12. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaojia Bao & Puyang Sun & Jianan Li, 2023. "The impacts of tropical storms on food prices: Evidence from China," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(2), pages 576-596, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    2. Ferguson, Jodie L., 2014. "Implementing price increases in turbulent economies: Pricing approaches for reducing perceptions of price unfairness," Journal of Business Research, Elsevier, vol. 67(1), pages 2732-2737.
    3. Meissner, Philip & Wulf, Torsten, 2014. "Antecendents and effects of decision comprehensiveness: The role of decision quality and perceived uncertainty," European Management Journal, Elsevier, vol. 32(4), pages 625-635.
    4. Jose I Castillo-Manzano & Mercedes Castro-Nuño & Lourdes Lopez-Valpuesta & à lvaro Zarzoso, 2021. "Quality versus quantity: An assessment of the impact of Michelin-starred restaurants on tourism in Spain," Tourism Economics, , vol. 27(5), pages 1166-1174, August.
    5. Tzu-Ming Liu, 2014. "Analysis of the Economic Impact of Meteorological Disasters on Tourism: The Case of Typhoon Morakot's Impact on the Maolin National Scenic Area in Taiwan," Tourism Economics, , vol. 20(1), pages 143-156, February.
    6. repec:dgr:rugsom:04a03 is not listed on IDEAS
    7. Xia, Lan & Roggeveen, Anne L., 2022. "How collective stress affects price fairness perceptions: The role of nostalgia," Journal of Business Research, Elsevier, vol. 152(C), pages 361-371.
    8. Robert Steiger & Eva Posch & Gottfried Tappeiner & Janette Walde, 2020. "Effects of climate change on tourism demand considering individual seasonal preferences," Working Papers 2020-08, Faculty of Economics and Statistics, University of Innsbruck.
    9. repec:jpe:journl:1726 is not listed on IDEAS
    10. R. Chakraborti & G. Roberts, 2021. "Learning to Hoard: The Effects of Preexisting and Surprise Price-Gouging Regulation During the COVID-19 Pandemic," Journal of Consumer Policy, Springer, vol. 44(4), pages 507-529, December.
    11. Michael A. Clemens, 2018. "Testing for Repugnance in Economic Transactions: Evidence from Guest Work in the Gulf," The Journal of Legal Studies, University of Chicago Press, vol. 47(S1), pages 5-44.
    12. Albert Ayorinde Abegunde, 2017. "Local communities’ belief in climate change in a rural region of Sub-Saharan Africa," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(4), pages 1489-1522, August.
    13. Paul Kimiti & James Kilika, 2018. "Organizational Resources, Industry Velocity, Attention Focus and Firm’s Performance: A Review of Literature," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(5), pages 185-185, March.
    14. Teresa Guardia Gálvez & Juan Muro Romero & María Jesús Such Devesa, 2014. "Measuring and Analysing Domestic Tourism: The Importance of an Origin and Destination Matrix," Tourism Economics, , vol. 20(3), pages 451-472, June.
    15. Fabio Gaetano Santeramo, 2015. "Research Note: Promoting the International Demand for Agritourism: Empirical Evidence from a Dynamic Panel Data Model," Tourism Economics, , vol. 21(4), pages 907-916, August.
    16. Nekeisha Spencer & Eric Strobl, 2020. "Hurricanes, climate change, and social welfare: evidence from the Caribbean," Climatic Change, Springer, vol. 163(1), pages 337-357, November.
    17. Christopher R. Knittel, 2014. "The Political Economy of Gasoline Taxes: Lessons from the Oil Embargo," NBER Chapters, in: Tax Policy and the Economy, Volume 28, pages 97-131, National Bureau of Economic Research, Inc.
    18. Adam Nguyen & Juan Meng, 2013. "Whether and to What Extent Consumers Demand Fair Pricing Behavior for Its Own Sake," Journal of Business Ethics, Springer, vol. 114(3), pages 529-547, May.
    19. Jodie Ferguson & Pam Ellen & William Bearden, 2014. "Procedural and Distributive Fairness: Determinants of Overall Price Fairness," Journal of Business Ethics, Springer, vol. 121(2), pages 217-231, May.
    20. Muel Kaptein, 2025. "A Profit Cap is not yet a General Moral Duty for Companies: A Corporate Social Contract Perspective," Journal of Business Ethics, Springer, vol. 199(2), pages 351-364, June.
    21. Santeramo, Fabio Gaetano, 2014. "Promoting the international demand for agritourism – empirical evidence from a dynamic panel data model," MPRA Paper 59625, University Library of Munich, Germany, revised 01 Feb 2014.
    22. Boonstra, Albert, 2004. "An empirical taxonomy of IS decision-making processes," Research Report 04A03, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jorapm:v:19:y:2020:i:3:d:10.1057_s41272-019-00222-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.